Will Walsh follow Rose out of Diageo?

The news that Nick Rose, Diageo’s chief financial officer, is standing down in the autumn should come as no surprise. All businesses run in cycles and there comes a time when experienced managers reach for the "been there, done that” tee-shirt.

Rose has been in the post for 13 years, having joined Grand Metropolitan in 1992 and is leaving to take up non-executive directorships, including, it is said, the chairmanship of a leading company.

That prompts the question of who else might be on the move in the medium-term as part of the drinks sector’s periodic cycle.

Speculation is already mounting that Diageo’s chief executive Paul Walsh, who has turned the company into the world’s foremost alcoholic beverage group, will look for a new challenge.

His name is regularly associated with the chairmanship of Unilever, where he is a non-executive director. Walsh, who is 58, joined Grand Met in 1982 and after the merger with Guinness became chief executive of Diageo in 2000. In the past decade he has transformed the group in concert with Rose, focusing it solely on alcohol and bolstering the balance sheet.

He sold off Burger King and Pillsbury and masterminded the transforming takeovers of first Seagram and then plum parts of Allied Domecq, both in cahoots with Pernod Ricard.

He also restructured the key North American chain of distributors to focus on Diageo’s premium portfolio of brands. The latest moves in China mean that Diageo is poised to become the largest international player in that fast-expanding market. There are also reports that it is about to take a controlling interest in its Indian joint venture.

In many ways, Walsh has taken Diageo as far as he can. The only “holes” in the portfolio are Cognac and Champagne, which are plugged by a 34% stake in Moët Hennessy.

It is no secret that Walsh would happily take the remaining 66% off of LVMH if the price were right (£9billion is the latest back-of-envelope brokers’ estimate), but otherwise Diageo’s strategy is to ramp up margins and fill in niche gaps.

That is a role that could be more than ably filled by 50-year-old Ivan Menezes, the head of Diageo’s North American and Asia Pacific interests, who many believe is being groomed to succeed Walsh.

At Pernod Ricard, Patrick Ricard stepped down from executive duties 18 months ago, elevating Pierre Pringuet to the chief executive’s office. But many believe Pringuet, the fixer behind the Seagram, Allied Domecq and Vin & Sprit (Absolut) takeovers, will pass on the baton within a couple of years, especially once the debt incurred to win Absolut is back to normal levels.

He too has been at the centre of events for more than a decade. Who is likely to succeed him? The Ricards cherish the idea of a family member running the group again, so step forward Alexandre Ricard, who is currently cutting his teeth as chairman of Irish Distillers. A business graduate, he has already served in the finance division, the duty free empire and in Asia. 

Among the world’s brewers, Graham Mackay has turned SAB Miller into the world’s second largest brewer and could feel that soon is the time to hand over to Alan Clark, who heads the group’s European businesses.

At UK level, Punch Taverns recently appointed a new chief executive and Enterprise Inns is set to follow. Anthony Fuller has done yeoman service at Fuller, Smith and Turner and the betting is that Simon Emney, who runs Fuller’s Inns, will step up.

Recent speculation has Ralph Findlay vacating the chief executive’s chair at Marston’s in favour of Alistair Darby, who heads the group’s pubs.

In all cases these leaders have transformed their companies in their time at the helm. A decade is a long time in the hot seat, especially when able successors are in the wings.

Finance on Friday, 14.05.2010